Introduction
India’s semiconductor ambitions are no longer speculative—they’re taking shape, one wafer at a time. Despite a no from TSMC, the world’s leading chipmaker, India’s doubling down on its semiconductor dream, proving that building an ecosystem is about vision, resilience, and long-term partnerships.
Let’s dive into how India is advancing its chip design and fabrication plans through the India Semiconductor Mission and what it means for the global chip race.
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Semiconductor Sector Overview: 5 Key Points
TSMC’s No, India’s Go: TSMC refused to set up fabs in India but the country continues to pursue chip manufacturing aggressively.
Tata-PSMC Partnership: A new fab in Gujarat led by Tata Electronics and Powerchip Semiconductor Manufacturing Corporation (PSMC) aims for 50,000 wafers/month by 2026.
Multiple Fab Projects: India has approved six fabs under the India Semiconductor Mission, including a ₹3,700 crore HCL-Foxconn JV in Uttar Pradesh.
Strong Back-End Growth: OSAT investments by Renesas and Micron are creating early semiconductor assembly and test capacity in Gujarat.
Government Support: Production-linked incentives (PLI), subsidies, and industrial corridors underpin India’s chip manufacturing drive.
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TSMC’s Legacy: A Lesson in First-Mover Resilience
When TSMC established its first fabrication plant in Hsinchu, Taiwan, it was a region known more for tea trees and scenic mountains than semiconductor prowess.
Like all firsts, it faced skepticism, uncertainty, and immense challenges. But the bet paid off—and Hsinchu became synonymous with silicon innovation.
India, today, is navigating a similar path. The absence of TSMC in India’s fab race may seem like a setback. But in the evolving geopolitics of chip manufacturing, everyone is seeking a second source. The industry is shifting from cost advantage to strategic advantage, and India is increasingly seen as a compelling alternative.
The global semiconductor race is no longer just about cheap labor or subsidies—it’s about resilience, security, and scaling the ecosystem.
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India’s New Anchor: Tata and PSMC
With TSMC off the table, India turned to Powerchip Semiconductor Manufacturing Corporation (PSMC). In 2023, PSMC agreed to bring their design expertise, oversee the fab construction, and train Indian staff.
The greenfield fabrication plant, being built in Dholera, Gujarat, will eventually be operated by Tata Electronics.
Key highlights of the Tata-PSMC fab:
- Target Output: Up to 50,000 wafers per month
- Timeline: Commercial operations aimed for 2026
- Ownership: Tata Electronics, with PSMC as a technology and training partner
- Significance: First large-scale commercial foundry in India
While PSMC will not manage the day-to-day operations, the knowledge transfer and upskilling of Indian talent are pivotal steps toward long-term independence in fabrication.
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More Fabs on the Way: A National Effort
The Tata-PSMC facility is one of six fabrication plants approved under the India Semiconductor Mission. Other major projects include:
HCL Group and Foxconn JV: Located near Jewar Airport, Uttar Pradesh, with a planned capacity of 20,000 wafers/month and an investment of ₹3,700 crore. Targeted commercial operations are set for 2027.
Additional Fabs: Five more fabs are in advanced construction stages, featuring both domestic and international players.
Together, these projects represent the largest semiconductor fabrication effort ever undertaken in India.
Back-End Momentum: OSAT Gaining Ground
Beyond front-end wafer fabrication, India is also nurturing OSAT (Outsourced Semiconductor Assembly and Test) investments—critical for completing the semiconductor value chain.
| Company/Partnership | Location | Target Output/Phase Details | Focus Area | Objective/Impact |
|---|---|---|---|---|
| Renesas + CG Power + Stars Microelectronics | Sanand, Gujarat | 15 million packages per day | Assembly and testing operations | Fast-tracked to support upcoming semiconductor fab growth |
| Micron Technology | Sanand, Gujarat | Phase 1: Began in 2023, operations start in 2024 Phase 2: Planned later this decade | Memory chip assembly and testing | Will start generating revenue before India’s first fab goes live |
These back-end facilities are designed to provide early wins—commercial output, employment, and capacity—while the front-end fabs are under construction.
The Policy Push: Incentives and Infrastructure
India’s semiconductor vision is backed by a robust policy framework:
- Production-Linked Incentives (PLI): To attract capital and ensure cost viability
- Capital Subsidies: For infrastructure, equipment, and training
- Industrial Corridors: Dholera and Sanand are being developed as semiconductor hubs
However, analysts caution that several structural challenges persist:
- Supply Chain: India lacks a complete ecosystem for fab equipment and raw materials
- Talent Pool: Skilled semiconductor engineers are in short supply
- Commissioning Delays: Fabs take 3–5 years to become operational and profitable
Despite these hurdles, the momentum is undeniable.
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The Stakes Are High—And India Is In the Game
The global chip race is no longer just about manufacturing—it’s about strategic sovereignty, supply chain security, and technological leadership. With trade tensions, geopolitical realignments, and rising demand from AI, automotive, and telecom sectors, every major economy wants a slice of the semiconductor pie.
India’s strategy isn’t about becoming another Taiwan or South Korea overnight. It’s about building smart partnerships, localizing critical capabilities, and climbing the value chain steadily.
With the Tata-PSMC fab as a bellwether, and OSAT projects like Renesas and Micron offering interim milestones, India’s semiconductor journey is now on a clear and credible trajectory.
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Conclusion: Chips Without Compromise
India’s may have received a “no” from TSMC—but that hasn’t stopped the country from rewriting its own semiconductor story.
With the India Semiconductor Mission in full throttle, a combination of strategic partnerships, policy incentives, and global supply chain shifts are propelling India into the next generation of chip design and fabrication.
And in the high-stakes chip race of the 21st century—only those truly prepared get to play.
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